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Financial markets strategy

The Australian dollar has started the week on the front foot, pushing back toward the 0.7200 area after a choppy end to last week. The week ahead is important, including Q1 local CPI, multiple central bank meetings, and of course ongoing high-stakes US-Iran negotiations all in focus.

Big moves in the Australian dollar on Monday mornings have become increasingly common since the US-Iran war began, and this week is no exception. After touching a new peak of 0.7222 on Friday optimism around the reopening of the Strait, the Australian dollar is back in the mid-to-low 0.71s today. This week’s data calendar is relatively light. Fed Chair nominee Kevin Warsh faces his Senate confirmation hearing on Tuesday, and his framing of monetary policy in the face of an energy shock will matter for FX markets. Other events include April flash PMIs, US March retail sales and New Zealand Q1 CPI.

The Australian dollar starts the week contending with yet another round of weekend war-related headlines. A two-week US-Iran ceasefire is technically still alive, but effectively on life-support. Weekend US-Iran negotiation yielded nothing, and President Trump has since announced a naval blockade targeting Iranian ports. The Australian dollar opened the week US¾ of a cent lower on this news. But it found a floor just below USD0.7000, and faces a more active local calendar this week - Mar/Apr consumer and business surveys, Mar labour force, several RBA speaking engagements and China’s Q1 GDP and March activity data.

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